Growth Finance to Establish 120 Billion KRW Defense Technology Innovation Fund

Purpose of Expanding the Defense Industry Base and Promoting Technological Innovation

[Asia Economy Reporter Kwangho Lee] Korea Growth Investment Corporation announced the selection plan for the first-year entrusted operator (GP) of the Defense Technology Innovation Fund to expand the base of the domestic defense industry.

The Defense Technology Innovation Fund is the first policy-type mother fund (totaling 60 billion KRW) in the defense sector, created through investment by the dedicated bank (Hana Bank) that manages the integrated research and development funds of the Defense Acquisition Program Administration’s affiliated institutes: the Agency for Defense Development, the Defense Technology Quality Institute, and the Defense Science Research Institute. The mother fund will establish sub-funds totaling 120 billion KRW over three years by investing 20 billion KRW annually. The purpose is to expand the base of the defense industry and promote technological innovation.

The first-year investment project aims to create a sub-fund worth 40 billion KRW within the year by investing 20 billion KRW from the Defense Technology Innovation Fund (mother fund), selecting one company.

Investments will be made in companies in advanced scientific technology fields related to defense, such as AI (Artificial Intelligence) and aerospace, that wish to enter the defense sector, as well as small and medium-sized defense enterprises. It plans to actively encourage excellent private innovative companies to enter the defense industry and promote technological innovation among existing defense companies.

Korea Development Bank will participate as a co-investor. It will support the early and stable establishment of the first-year Defense Technology Innovation Fund.

Growth Investment Corporation stated, “Through the Defense Technology Innovation Fund, we hope to provide the initial momentum to enhance the innovation of the defense ecosystem so that many promising companies will take an interest in and connect with the defense industry.” It added, “In the operation and management of the funds to be established in the future, we will work closely with related organizations such as the Defense Acquisition Program Administration and the Agency for Defense Development to promote the expansion of the defense industry base and technological innovation.”